Credit Card Terms And Conditions

Credit Card Terms And Conditions - A Closer Look

| Credit Website Home | Credit Website Articles |

Its sad but today most credit card companies are devious and theyve designed everything possible into the fine print of their terms of service to catch you. Therefore, when looking at any credit card offer, make sure you take a close look at the fine print.

Believe me, I am fully aware that its purposely put together to appear like a maze, but because its so vitally important to your financial well-being and with the current trend towards relatively easier-to-read summary boxes you no longer have a legitimate excuse for ignoring the terms of service.

That being said, Ive outlined a few of the key aspects to look for that are normally hidden away in the fine print of most credit card offers.

The Annual Fee
Although its not as common as it once was, its still around. Especially, on the so-called higher status Gold and Platinum cards which still tend to charge much higher fees than the basic credit card. Annual fees are simply an easy way to get another $39.95 to $79.95 or more from each and every customer. It may not sound like much but it adds up when youve got millions of customers. If you give the company a call you can normally get it waived and if they wont then dont take out the card or cancel the one youve got - its the principle of it.

Late Payment Fees and Penalty Charges
Cash advance fees, late payment charges and exceeding your credit limit are the types of fees you need to pay attention to when checking out the fine print. Many cards have unjustifiably high fees and if they do you shouldnt sign up for them. Just say no!

Calculating Interest
Because its so hard to understand (they make it that way on purpose) this is often one of the most overlooked, yet important aspects hidden away in the fine print. There are basically three methods being used to calculate interest on your balances.

Adjusted Balance
Not as common as it once was but some companies are still using it. In a nutshell, you are charged interest on whatever your balance was on the day the company sent you the bill.

Previous Balance
Basically, this method is simply a horse of a different color. In this version you are charged interest on your balance as it stood at the end of the previous billing cycle regardless of how much youve spent or paid off since. Some consider this a tad bit easier to understand.

Average Daily Balance
Last but certainly not least. This method is currently the most common and its also the most complicated. Using this method your balance is added up at the end of each day in the billing cycle, its then divided by number of days that have transpired in that billing cycle and interest is charged in this amount. I know, clear as mud.

If your balance jumps around this method may be slightly better for you than the other methods because it keeps you from paying full interest on a balance that just happened to be large on the billing date.

You should also be paying attention to the monthly rate of interest rather than just relying on the APR. APR is an estimate of the total cost of borrowing but its the monthly interest plus the various fees and charge that will show you exactly how much you are paying.

Grace Period
This is extremely important for about 40% of all credit card holders because thats the approximate number of people who pay off their balances each month. Its also important for the remaining 60% because then you can avoid interest on new purchases for the first 30 days or so. As a result, make sure that the card youre looking at has a grace period on purchases; otherwise, you could end up being charged interest from the moment you buy something. On the other hand, virtually no credit card company offers a card with a grace period on cash advances or credit card checks.

Currency Conversion Fees
This only applies if you plan on using a card outside the country. If it does apply to you, take a look at what youll be charged for transactions made in other currencies. Some cards are much more expensive than others.

This article may be reproduced only in its entirety.